David Einhorn, founder of hedge fund Greenlight Capital
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Safe to assume that hedge fund manager David Einhorn is not going to wind up invited to Apple's next beer bash. Earlier this month, Apple CEO Tim Cook described the lawsuit filed by Einhorn's Greenlight hedge fund as a waste of time and money. Einhorn since took his case directly to shareholders with a public elaboration of his reason why Apple ought to part with some of its $137 billion in cash in the form of issuing preferred stock to investors.

Now U.S. District Judge Richard Sullivan has granted his bid to block next week's shareholder vote on an Apple proxy proposal that would eliminate its ability to issue "blank check" preferred stock without investor approval. Einhorn contended that Apple illegally bundled that provision with several other items up for investor consideration.

The vote was originally slated for February 27.

One idea floated by Einhorn was to create something he called iPrefs -- a $50 stock with a 4 percent annual dividend. During a conference call earlier in the week, he said investors would be able to trade these instruments as something separate from Apple's existing stock. Apple's current investors would be given "one or more iPrefs at no cost," Einhorn said.

In a statement released this afternoon, Greenlight Capital hailed the court decision:

This is a significant win for all Apple shareholders and for good corporate governance. We are pleased the court has recognized that Apple's proxy is not compliant with the SEC's rules because it bundles different matters in Proposal 2. We look forward to Apple's evaluation of our iPref idea and we encourage fellow shareholders to urge Apple to unlock the significant value residing on its balance sheet.

Apple was not immediately available for comment. We'll update this post as more information becomes available. [Note: Late today, Apple yanked Proposal 2 from its proxy and issued a statement. See the update note at the end of this story for more.]

When he appeared at a Goldman Sachs conference in San Francisco on February 12, Cook dismissed claims by Einhorn that Apple possessed a Depression-era mindset. He said the company makes "bold and ambitious" bets on products at the same time that it was being financially conservative.

"I don't know how a company with a Depression-era mindset would have done all those things," Cook said. "We do have some cash, but it's a privilege to be in this position...It's an incredible privilege for us to be in a position where we can seriously consider returning additional cash to our shareholders."

Despite the legal back-and-forth, he also said that Apple's management team and board remained in "very active discussions" about how to return more cash to investors. Apple, he declared, will evaluate all options, including those proposed by Einhorn.

In a letter to shareholders Greenlight Capital released along with its lawsuit, the company offered this statement from Einhorn:

We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders. Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple's existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple's financial resources to pursue its business strategy.

We are disappointed with the court's ruling. Proposal #2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests. Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal #2 at our annual meeting next week.

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Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
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